The American Humane Assn., the century-old charity charged with overseeing the welfare of animals on films and television shows, paid nearly a quarter of a million dollars to the business partner of the board's chairman, Eric Bruner, a federal tax filing shows.
The AHA paid $233,863 to Gregory Dew to provide unspecified consulting services to the nonprofit organization, making him the highest-paid "independent contractor" for the AHA in the fiscal year that ended June 30, 2011, according to a document the charity filed with the IRS.
Dew is Bruner's business partner in Spectrum Consulting Group, a limited-liability company in Austin, Texas, that describes itself as "an association of management consultant experts."
Spectrum's website describes Dew and Bruner as leaders of the corporation and lists the same Austin, Texas, address that AHA gives for Dew in its IRS filing.
Records also show that Bruner wasn't the only board member with ties to Spectrum. Former interim AHA Chief Executive George Casey has been managing partner and consulting principal in Spectrum since 2009, according to his LinkedIn site. He was paid $277,102 by AHA during the same period the charity compensated Dew for his services.
The disclosures were contained in an April IRS filing and were the subject of a recent complaint filed by an AHA employee with the website EthicalAdvocate.com, which enables whistle-blowers to anonymously report complaints about alleged employer misconduct.
The payment to Dew occurred during a period when the association confronted mounting financial problems. Regulatory filings show that net assets for AHA, which supports a variety of programs that support animal and child welfare, have fallen to $8.75 million as of June 30, 2011, from $23.3 million in 2008.
Real or potential conflicts of interest between charities and their board members are not uncommon, but most organizations — including AHA — have guidelines that require they be fully disclosed to avoid any appearance of impropriety.
"If it hasn't been disclosed it presents a problem because transparency is critical for governance to work," said Al Osborne, senior associate dean at the UCLA Anderson School of Management. "It creates the possibility that activities have not been aligned with the best interests of the charity."
AHA representatives said the business ties among Dew, Bruner and Casey were fully disclosed to its board and that Bruner did not profit from payments made to Dew, who was paid directly. Bruner was a board member but not board chairman at the time the decision was made to hire the consultant, officials said.
"There was no impropriety," said AHA Chief Executive Robin Ganzert, a former deputy director of philanthropic services at the Pew Charitable Trusts, who was tapped to help improve the AHA's finances in October 2010 — after AHA had retained Dew. "The board followed its policy for conflicts of interest and everything was disclosed."
Ganzert, who has extensive experience in advising nonprofits, said Dew served as an IT consultant and provided improvements to AHA's accounting systems.
Bruner said the board tapped Casey and Dew because of their expertise.
"To be honest, we were under dire circumstances," Bruner said. "Our endowments were dwindling, we had poor leadership and we needed to make a change to improve the environment quickly."
The charity's IT systems in particular were archaic and needed to be upgraded, he said.
"George [Casey] went to people that he knew and trusted and he reached out to Dew because he knew he was the right person to come into the job," Bruner said. He said Dew took a leave of absence from Spectrum while Dew worked for the AHA for less than a year. And the arrangement was vetted by the board, Bruner said. "We were upfront about it."
Like other charities, the AHA's revenues were hard hit by the Great Recession, which caused investment losses and slowed contributions. The charity relies mainly on donations, including one of more than $30 million in 2006 from philanthropist H. Guy Di Stefano.
Through a streamlining of programs, layoffs and renewed focus on fundraising, the AHA posted a surplus of $458,000 in fiscal 2012 — its first surplus in seven years, Ganzert said.
Founded in 1877, the Washington organization calls itself America's "voice for the protection of children and animals."
The organization sends out certified animal safety representatives to ensure that film and TV productions follow its guidelines, which contain protocols for handling many types of animals.
The film unit of the AHA each year monitors more than 2,000 productions that use animal performers and is mostly funded by grants, about $2 million a year, from industry cooperative funds for the Screen Actors Guild and AFTRA.
But animal-rights activists have in the last decade accused the group of being too cozy with producers.